Correlation Between CF Industries and Vestis

Can any of the company-specific risk be diversified away by investing in both CF Industries and Vestis at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining CF Industries and Vestis into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between CF Industries Holdings and Vestis, you can compare the effects of market volatilities on CF Industries and Vestis and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in CF Industries with a short position of Vestis. Check out your portfolio center. Please also check ongoing floating volatility patterns of CF Industries and Vestis.

Diversification Opportunities for CF Industries and Vestis

0.56

Correlation Coefficient

CF Industries  Vestis

Very weak diversification

The 3 months correlation between CF Industries and Vestis is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding CF Industries Holdings and Vestis in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vestis and CF Industries is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on CF Industries Holdings are associated (or correlated) with Vestis. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vestis has no effect on the direction of CF Industries i.e., CF Industries and Vestis go up and down completely randomly.

Pair Corralation between CF Industries and Vestis

Allowing for the 90-day total investment horizon CF Industries Holdings is expected to generate 0.97 times more return on investment than Vestis. However, CF Industries Holdings is 1.04 times less risky than Vestis. It trades about -0.25 of its potential returns per unit of risk. Vestis is currently generating about -0.37 per unit of risk. If you would invest  8,970  in CF Industries Holdings on November 29, 2024 and sell it today you would lose (1,192) from holding CF Industries Holdings or give up 13.29% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

CF Industries Holdings  vs.  Vestis

CF Industries Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days CF Industries Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's technical and fundamental indicators remain nearly stable which may send shares a bit higher in March 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Vestis

Risk-Adjusted Performance

Very Weak

Over the last 90 days Vestis has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in March 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with CF Industries and Vestis

The main advantage of trading using opposite CF Industries and Vestis positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CF Industries position performs unexpectedly, Vestis can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Vestis will offset losses from the drop in Vestis' long position.

The idea behind CF Industries Holdings and Vestis pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.